Reliance Ports received Rs 1,767 cr irregular I-T sops: CAG

CAG has pulled up the Income Tax department for giving benefit of Rs 1,767 crore to the port and terminal arm of Reliance Industries by allowing deductions meant for public facilities to the company’s captive jetties.

CAG said the income tax assessing officer (AO) allowed deduction of Rs 5,245.38 crore to Reliance Ports and Terminals Ltd towards construction of four captive jetties at Port Sikka in Gujarat without examining the eligibility criteria for allowance of the deduction.

In a performance audit of tax holiday for development of infrastructure sector, which was tabled in Parliament today, CAG said: “The irregular allowance of deduction by the AO has resulted in under assessment of income of Rs 5,245.38 crore involving tax effect of Rs 1,766.74 crore”.

The Comptroller and Auditor General of India (CAG) said that since the jetties were captively used by Reliance Ports and not for public purposes, “deduction allowed (by AO) was not in order”.

The Income Tax department, however, did not accept the observation of CAG and said the I-T Act did not distinguish between “public facility” and “private facility” for claiming deductions under 80 IA which provides deduction in respect of profits and gains of companies engaged in infrastructure development at 100 per cent for a certain period.

On the contention of the I-T department that the facility was open for usage by other players also when not in use by RIL Group companies, the CAG sought to know from the CBDT which other companies had used the facility.

CAG said that I-T department, in order to substantiate their stand, had not submitted any list of other assessees owning ships who had used jetties when they were not in use by RPL/RIL. PTI

CAG pulls up DoT for frontloaded subsidy to Tata Tele

Comptroller and Auditor General (CAG) of India has pulled up DoT for paying front-loaded subsidy to Tata Teleservices without conducting any checks, saying deficencies found in verification were indicative of weak monitoring mechanism. In its report tabled in India’s Parliament on Tuesday, CAG said Department of Telecom’s (DoT) unit was to pay a front-loaded subsidy to telecom companies for expanding telephone connectivity in rural areas.

The subsidy amount is payable at the end of the quarter in which the connection is installed and made functional.

CAG said the Controller of Communication Accounts (CCA), Rajasthan Telecom circle - which is a unit of Department of Telecom - “allowed front loaded subsidy of INR 71.49 crore on the basis of claims submitted by Tata Teleservices (TTSL) during 2008-2010, without conducting any check regarding genuineness of customer application forms before disbursement of subsidy”.

DoT had issued instructions in January 2008 to TTSL to furnish a hard/soft copy of the customer application form or CAF in support of claims for each number for which front-loaded subsidy had been sought.

“During test check of records at office of the CCA of Rajasthan telecom circle (September 2013) it was observed that in most of the cases, either there were no soft/hard copies of CAF or those were related to mobile subscribers instead of RDELs or Rural Household Direct Exchange Lines (landlines),” said the Comptroller and Auditor General of India.

The ministry’s reply in June this year said that hard copies of the customer forms from April 2007 to March 2008 were available. However CDs relating to financial year 2009-10 were burnt in a fire incident.

“Further, there was no instruction to check the CAFs before or after payment of subsidy claims. It was further stated that during the physical verification of RDELs, all the RDELs were not found installed at their original locations as per claims and original CAFs and hence were adjudged ineligible,” the report said.

A demand notice of INR 137.99 crore (including interest) for the subsidy paid during 2007-08 to 2009-10 was issued to TTSL in June 2014, the report said adding that the matter is presently disputed before the sole arbitrator.

“Reply of the Ministry confirms deficiencies in vertification and payment mechanism for RDEL subsidies. It is also indicative of weak monitoring mechanism on the part of DoT in verification of subsidy claims,” CAG said.